The failure of XL Leisure Group plc is far from the first of its type and certainly will not be the last. The handling of this not unexpected collapse was initially very poor. In typical fashion, the British carriers did rally round to make the demise of what was once Sabre Airlines slightly less distressing for those caught up with the failure.
The numbers involved are substantial. Up to 85,000 XL clients were abroad at the time, and forward bookings are thought to be well over 300,000. All have been affected, some worse than others.
This is the largest British holiday company collapse since the demise of Court Line in 1974. XL has blamed the crisis on the rapid rise in fuel costs over the last 12 months, but two years ago its auditors KPMG, quoting financial irregularities, resigned the account.
The knock on effect is no less dramatic - XL employed nearly 2,000 people. For the most part they have no jobs. Supply companies such as caterers will have to adjust their requirements. Down the line, handling agents and hotels will need to look for new customers. Millions of 2009 brochures will have to be destroyed. While primarily a holiday airline, business travellers certainly used XL Airlines with its ultra competitive fares.
It is not all negative, but a re-adjustment takes time and will be painful. XL”s aircraft fleet was modern and the planes will find new homes. In time aircrew and cabin staff will find jobs. For some a dream holiday has been destroyed forever, but, for the most part, holidaymakers will transfer their allegiance elsewhere. People are out of pocket. Crocodile tears will be displayed by other operators only too keen to pick up extra business. The current financial outlook will mean fewer holidaymakers next year regardless of the XL demise.
XL was the shirt sponsor of West Ham United. Northern Rock, nationalised, still supports Newcastle United (itself something of a basket case) whilst AIG (rescued within the last few days) threw its lot in with Manchester United. Does this tell you something about soccer shirt sponsorship?
The collapse of XL was handled badly. A great many people suffered needlessly. A better system would have softened the blow and made life easier for everyone. As it was, the lawyers and accountants once again made profit from the agony of others.
Initially the Civil Aviation Authority (CAA), the policing agency for air travel, blamed the (virtually self-appointed) liquidator for the agony of the demise. Eventually they teamed up to hold government responsible.
When an airline fails the first sign is usually a tow truck placed in front of a plane physically stopping it from taking off. The airport is usually owed money. It has been known in the past that when a carrier is about to go under somehow (and we will leave readers to guess) the aircrews find out and ensure that they are in the air and on the way home when the announcement is made. That way that day”s passengers, at least, the flight crew and the aircraft are not stuck at some distant point.
Other carriers do help (the ”there but for the grace of God go I” theory) though, with security as it is, the use of jump seats and other special positions on the aircraft are no longer available.
The government needs urgently to draw up legislation so that if such a situation arises in the future with the demise of a British airline under the jurisdiction of the CAA, the flight operations department of the carrier concerned has the authority to continue to operate and repatriate on schedule all UK registered aircraft to their home base in the 24 hours after the grounding. This would eventually be funded by the administrator of the airline.
The cost would be far less than under the present arrangements with an instant grounding of the ”planes. Some passengers have been brought back on scheduled services and other by special charter flights. The aircraft themselves still have to be retrieved. Any aircraft sitting on the ground for a period of time will require an (expensive) technical inspection, adding to the cost. A crew will have to be found and positioned.
The XL problems will once again focus on the fact that holidaymakers on an organised vacation under the ATOL insurance scheme will be covered, whilst many others will not. Credit and debit card bookers might be able to claim for all/some of their costs and with insurance cover the usual question should be raised. Was your trip insured? Did you read the small print? Are you covered for airline insolvency?
Once the initial confusion was unravelled the CAA excelled itself (forgive the pun). During the first week of the repatriation operation 199 flights were organised which carried 46,765 passengers back to the UK from 40 destinations.
XL Airlines was a scheduled airline and as such legally did not have to offer any insurance backup regarding a possible failure. The airlines” argument is very simple. If you purchase a product in the high street you gain the basic guarantee and pay extra for extended cover. The same goes for flights. Why add an extra cost? After all many travellers are already covered by some kind of insurance. And what happens if you are booked with an overseas airline which does not offer the same terms?
The transport secretary, perhaps under the auspices of the CAA, needs urgently to convene a meeting of British airlines to discuss what will happen in the future in the case of a failure. The British public is used to the excellent service provided by the nation”s air carriers. The CAA is a fine air transport policeman and midwife. It needs very quickly to add the skills of an airline undertaker.